Fresh & Easy sold; some Bay Area stores to close

A small but excited crowd awaits the grand opening of a new Fresh & Easy grocery store in Sunnyvale on Oct. 26, 2010. (Jacqueline Ramseyer/SVCN)

Fresh & Easy, the neighborhood-style grocery chain with about 15 stores in the Bay Area, announced Tuesday it had been sold and that some stores will close.

The sale could leave up to 50 stores in the three states where Fresh & Easy operates -- California, Arizona and Nevada -- ownerless, forcing them to close. At least two of those closures will be in the Bay Area.

On Tuesday, Fresh & Easy declined to say which stores would close or how many employees would lose their jobs.

"We are still communicating with our employees and do not have a list of stores at this time, though the vast majority in the area will remain open," spokesman Brendan Wonnacott said in an email,

Most managers and employees at the 15 Bay Area stores contacted by this newspaper expressed relief that they had been spared in the sale and their stores would remain open. But the Fresh & Easy at Third Street and Carroll Avenue in San Francisco and one in San Jose will close, according to interviews with employees at those locations.

On the Fresh & Easy website, the company wrote that the sale to "Yucaipa preserves more than 4,000 jobs and a vast majority of the business. Unfortunately, as a result of this agreement some stores will be closing." Yucaipa is run by billionaire Ron Burkle, who has snatched up floundering grocery stores across the country.

The closures are likely to happen within three months, which is the expected time frame to complete the sale to Yucaipa.

Philip Clarke, chief executive of Tesco, the British supermarket conglomerate selling the chain, said in a statement the sale "represents the best outcome for Tesco shareholders and Fresh & Easy's stakeholders," while protecting jobs.

Fresh & Easy marks Tesco's second failed international venture after it paid a huge sum to exit Japan last year. The company has 200 shops and hasn't made a profit since it was founded in 2007. Analysts say the company chose cheap real estate -- most stores were smaller than American shoppers are used to -- in unappealing retail locations. Tesco also never fully understood the American consumer, they say, and instead brought its British style of sterile stores and plastic-wrapped produce to U.S. shores, where it couldn't compete with the popular farmers market-style Whole Foods and Sprouts.

"It was typical British -- there was no emotion," said Phil Lempert, industry analyst and editor of SupermarketGuru.com. "Each individual fruit was wrapped. There was no aroma. Things were a little bit too packaged."

But Lempert said Fresh & Easy has a bright future under Burkle, who is also credited with turning around the floundering A&P neighborhood-style grocery. Analysts speculate Burkle will relaunch the Wild Oats brand -- the natural grocery store chain that Whole Foods bought -- in concert with Fresh & Easy.

"This might be the start of a national chain of neighborhood stores," he said.